Place of provision of service rules

Service Tax : Place of Provision of Services

Presented by:Ca. Jayesh Gogri

PLACE OF PROVISION OF SERVICES

23-01-2015 CA JAYESH GOGRI 2

Place of provision of Services...

• Based on the principle of destination based consumption tax

• An important move towards implementation of GST

• Important to be determined in case of import and exports at present– Imports – Reverse Charge– Exports – Not leviable to Service Tax

• Rules introduced in 2012

• Tries to harmonise with international tax practice to ensure no doubletaxation and no double non-taxation

• Later the better Rule


Taxable territory

• Only the transactions in taxable territory leviable toService Tax• Taxable territory: India except Jammu & Kashmir• “India”

– not only the land mass– territorial waters– continental shelf– exclusive economic zone or any other maritime zone as defined– the sea-bed and the subsoil underlying the territorial waters– the air space above its territory and territorial waters– the installations structures and vessels located in the continental shelf of India and

the exclusive economic zone of India, for the purposes of prospecting or extractionor production of mineral oil and natural gas and supply thereof


India (Exclusive Economic Zones)


PPSR: Rule 3: General/residual rule


Nature of service In general context

Rule The location of service receiver

Example ‘A’ receives service in Mumbai from ‘B’ ofNew York. The place of provision will beMumbai

PPSR: Rule 4: Performance


When these services are provided from a remote location by way of electronic means, what will be the place of provision?

Nature of service Services in respect of goods that are required to be made physically available*

Rule Performance based

Example Maintenance, Erectioning etc

* Not applicable for goods temporarily brought in India for repairs (earlier repairs,reconditioning and reengineering)

PPSR: Rule 5: Property based


Nature of service Services in relation to immovable property

Rule Location of the property

Example Architect, hotel accommodation,Construction etc

PPSR: Rule 6: Event based


Nature of service Services in relation to events

Rule Place where it is held

Example Exhibition, conference etc.

PPSR: Rule 7: Greatest proportion


Nature of service Multiple location services

Rule Place where greatest proportion ofservice is provided in the taxable territory

Example ‘A’ has provided management consultancyservice to the extent of 20% in Delhi, 30%in Mumbai and 50% in Bangkok. The Placeof Provision is Mumbai since greatestproportion of service is provided in theMumbai i.e. taxable territory

PPSR: Rule 8: Both located in TT


Nature of service Service provider and service receiver arelocated in taxable territory

Rule The location of service receiver

Example ‘A’ receives service in Mumbai from ‘B’ ofGoa in relation to a tour in South Africa.The place of provision will be Mumbai.

PPSR: Rule 9: Specified Category


Nature of service Banking, telecommunication, onlinedatabase, intermediary*, hiring oftransport upto 1 month

Rule Place of service provider

Example ‘A’ from Mumbai provides onlinedatabase services to ‘B’ of Singapore, theplace of provision will the Mumbai

* Intermediary earlier included person who arranged or facilitated provision ofservice but now will also include the persons providing above facilities w.r.t goods

PPSR: Rule 10: Goods Transportation


Nature of service 1.Goods transportation(not covering mailor courier)2.the place of provision of services inrelation to goods transportation agency

Rule 1.Place of destination2.The location of the person liable to paytax

Example •If ‘A’ of Mumbai transports goods to ‘B’of Goa, the place of provision will be Goa.•If A of Mumbai transports goods to B ofKathmandu, the place of provision will beMumbai.

PPSR: Rule 11:Transportation of passengers


Nature of service Passenger transportation services

Rule Place where the passenger embarks

Example ‘A’ from Mumbai travels to Goa by bus.The place of provision is Mumbai.

PPSR: Rule 12: Services on board


Nature of service Services on board a conveyance

Rule Place which is the first scheduled point ofdeparture of that conveyance for thejourney

Example ‘A’ from Mumbai travels to Goa by a flightand during the journey, he buys foodstuff. The place of provision is Mumbai

Rule 6A of STR – Export of Services

Conditions for considering a service as Export(a) the provider of service is located in the taxable territory,(b) the recipient of service is located outside India,(c) the service is not a service specified in the section 66D of the Act,(d) the place of provision of the service is outside India,(e) the payment for such service has been received by the provider ofservice in convertible foreign exchange, and(f) the provider of service and recipient of service are not merelyestablishments of a distinct person in accordance with item (b) ofExplanation 3 of clause (44) of section 65B of the Act.


Case Study

• If Services are provided from outside India as per PPOS Rules

• Payment is received in INR

• Will it be considered as Export?– Rule 6A – Convertible Foreign Exchange

• If not considered as ‘Export of services’ then Liable to Service Tax???


Ca. Jayesh GogriDirector

2/22 Nityanand Nagar, Sahar Road, Andheri (East),Mumbai-400 069.

6-A, Ranjit Studio Compound, DSP Road, Dadar (East),Mumbai-400 014.

+91 22 2684 0208+91 9821 012 151+91 9870 712 151

[email protected]@gscintime.com

Right advice at right time…


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Place of provision of service rules

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